Latest statistics show that Batswana are a Facebook people with almost 1 034 600 users and this number which represent 42.7 percent of this country’s population is exposed to many businesses who uses the social network as a medium of marketing and advertising.
But this issue of high numbers using Facebook comes as a double edged sword for the Botswana Unified Revenue Services (BURS), limiting the collection of revenues on the cyber space. Companies advertise on Twitter, Instagram and other social media networks and this would affect BURS tax collection. Local economist told WeekendPost that the problem with this country taxation is collection, advising that gathering of taxes should be maximized or prioritized. When reading the national budget recently finance minister Thapelo Matsheka talked of an overall deficit of P1.98 billion, or -1.1 percent of GDP. Matsheka said this negative budget overturn was due to the lower tax collections during the year.
“Efforts will therefore, be intensified to ensure efficiency in the collection of tax revenues by the Botswana Unified Revenue Service through the continuous review of tax laws and leveraging on the use of ICT to enhance compliance,” said Matsheka. BURS director of tax and policy William Nkitseng told attendees at the recent FNBB budget review that business models are changing and going into the digital space, hence the need for the tax regime to evolve. He said businesses are changing from being SMMEs to big digital business model who come with challenges especially taxation issues.
Botswana want to have a digital economy by 2036 and already there has been much evangelism to impart Fourth Industrial Revolution into this nation’s young minds as it is seen as a major tool to being a high income economy. But there is already a challenging facing BURS coming with digital businesses according to Nkitseng, they are not easy to tax. Nkitseng said they wish to tax everyone doing business in Botswana, your Ubers and Netflixes. He gave an example that Uber can own a fleet of taxis from somewhere and someone is Botswana control the fleet, earns a lot of money but not taxed.
Nkitseng said this country’s tax legal framework is limited because tax is withheld looking at physical presence. “We wish to catch these companies….efforts are being made to catch these people, by the end of this year we will know how we can get hold of companies in the digital model. We want your money you make for Google, Netflix/Uber because they make a lot of money here and we don’t tax them,” he said.
Nkitseng and BURS cannot go to Menlo Park, Carlifornia, USA to withhold taxes from Facebook. Netflix is making money in Botswana with a subscription of around P100 per month, but zero tax. By October 2015 Netflix is said to have had 69.17 million subscriber globally and in this five years the number may have doubled.
Botswana has its own Uber now, Hello Cabs which also use the phone app like Ubers’. Uber has a global market value of P720 billion, it generated P120 billion in gross bookings in the most recent quarter. It boast more than 75 million active Uber riders across the world and is available in more than 80 countries worldwide. Nkitseng believes Botswana should also cash from these plaudits via taxation.
He however said the world is aware that digital companies are not paying taxes. It is already a topical issue in the G20 countries’ tops and a highly debated issue. Even regionally, Africa is moving on coming up with inclusive frameworks for the digital economy. But Nkitseng’s concern was not mentioned in the most important announcement of the year which has the government planning period in mind. Matsheka may have missed the taxing of the digital companies, even though Nkitseng said before the end of this year there will have made a plan on how to tax digital businesses. Maybe taxation of the digital economy could have been hidden in the current financial year but not coming out explicitly, it may come out clear during the year in Nkitseng.
Matsheka only said, “To this end, efforts will continue to be made to expand our tax base through review of tax legislation and regulations, to enable the revenue authority to effectively discharge its mandate. It is for this reason that focusing on simplifying the tax legislation continues to be a priority as a way of enhancing tax compliance, while at the same time, reducing the cost of tax administration.”
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.